Alibaba: On the IPO Track?

It would certainly be a mega-deal, and the timing looks good

Founded about 14 years ago, Alibaba is still a privately held company. But that may change this year. According to Bloomberg, it looks like the giant Chinese e-commerce company has hired Credit Suisse (NYSE:CS) and Goldman Sachs (NYSE:GS) as lead investment bankers.

If there is an IPO, it will likely be on the Hong Kong exchange and could result in a capital raise of $3 billion to $4 billion, giving Alibaba a market cap over $40 billion. Yes, it would be in the Internet big leagues with companies like eBay (NASDAQ:EBAY) and Facebook (NASDAQ:FB).

Signs of IPO preparation are already popping up at Alibaba. Just yesterday, co-founder and CEO Jack Ma announced he will step down in early May (he’ll take the role of executive chairman). It looks like he wants to bolster the senior management team.

The timing for a deal also appears good. Keep in mind that the Hang Seng index is up about 22% over the past six months. Besides, Alibaba is a top brand in China and has assets that span mega-markets like e-commerce, auctions and online payments. In fact, for the first nine months of 2012, revenues surged by 74% to $2.9 billion, and profits more than tripled to $781.7 million.

An IPO would also be good news for Yahoo (NASDAQ:YHOO), which has a 20% stake in Alibaba. Perhaps this is one reason Yahoo’s shares have been rising lately, up 27% over the past six months.

Based in Silicon Valley, Tom Taulli is in the heart of IPO land. On a regular basis, he talks with many of the top tech CEOs and founders trying to find the next hot deals and finding out which start-ups are stinkers.

A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.

Tom is routinely quoted in the media about upcoming deals with his interviews on CNBC and Bloomberg TV, but he is eager to take your questions too. You can message him on Twitter at @ttaulli. And feel free to weigh in via the comments section on any of his IPO Playbook posts.